Zipcar Updates: Pilots Monthly Membership, Zipvans And D.C.’s Housing Societies

As Zipcar (NYSE:ZIP) faces a stiffer challenge of taking on new competition entering its markets in 2012, the leading car-sharing company has come up with an innovative and flexible monthly membership pilot program in Chicago and Toronto to attract a wider member base. A lower entry-point and flexible terms are expected to attract more users to try out Zipcar’s popular services that boast of impressive membership retention rates despite a higher membership premium charged compared to competition.

Following Hertz, car rental giant Enterprise recently joined the hourly rental market by making several acquisitions along the East Coast markets like Mint Cars On Demand in New York and Boston, and it plans increase its NY fleet by 50% this month. Zipcar also expanded its Zipvan cargo van service to Toronto last week, and has tied up with D.C. Housing Authority to provide Zipcars service for its residents. Zipcar currently serves 700K members with a fleet of over 9K vehicles in North America and Europe.

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Monthly Membership Fee Experiment

After building a 700K-strong loyal customer base through its annual membership plans, Zipcar is now trying to attract a wider member base with more flexible monthly membership plan pilot programs in Chicago and Toronto. Flexible membership will attract users who want to test Zipcar’s services before opting for annual membership. A more flexible membership plan could benefit Zipcar better take on its competitors such as Hertz On Demand, Daimler’s Car2Go and Enterprise’s WeCar that currently offer more flexible terms than Zipcar.

The company has consistently managed retention rates as high as 97-98%, indicating sufficient customer satisfaction despite the cost premium. This means people who try Zipcar’s tech-savvy car-sharing services with latest fleet, automated Zipcards, smartphone apps are highly likely to continue subscribing to Zipcar, and the more Zipcar can convince people to try its service through flexible membership, the higher traction it can achieve. Read more – Zipcar’s Flexible Monthly Membership Experiment Would Attract More Users To Try Car Sharing

It also recently tied up with the Washington D.C. Housing Authority to provide  Zipcars at two public housing sites, making it one of the first housing societies in the U.S. to partner with a car-sharing service. It is in line with Zipcar’s previously announced plans to collaborate integration of its car-sharing services with new housing developments and satellite cities to grow membership.

Zipvans Reach Canada

Last week, Zipcar also expanded its Zipvan cargo van service to Toronto, its fifth Zipvan market after San Francisco, Chicago, Boston and Washington D.C.. The service was launched six months ago. The rates start at $15/hour and $105/day, which include the costs for gas, insurance, parking, roadside assistance and up to 180 miles of driving per day. The self-serve Zipvan service offers full size Ford E-150 cargo vans to enable customers to transport bulky personal items like furniture purchases, allow students to relocate in and out of dorms, and help businesses meet their transportation needs too bulky for cars or pickup trucks at a lower cost.

We have a $18 Trefis price estimate for Zipcar, which is at a significant premium to the current market price.

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